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Roadmap to become a Financial Analyst

TABLE OF CONTENTS

  1. WHO IS A FINANCIAL ANALYST?
  2. HOW MUCH DOES A FINANCIAL ANALYST EARN?
  3. ROLES AND RESPONSIBILITIES OF A FINANCIAL ANALYST
  4. SKILLS NEEDED TO BE A FINANCIAL ANALYST
  5. CERTIFICATIONS
  6. A GUIDE TO BECOME A FINANCIAL ANALYST
  7. TOP 10 COMPANIES IN INDIA TO HIRE FINANCIAL ANALYST AS FRESHERS
  8. INTERNSHIPS
  9. FUTURE OUTLOOK
  10. CAREER HIERARCHY

 

 

I. WHO IS A FINANCIAL ANALYST?

  • Financial analyst is the one who plan, analyse and project the financial related work of the company.
  • They must anticipate future income and expenditures to build cost structures and calculate capital budgeting for projects.
  • Financial analyst is a broad term that includes different types of job profiles and careers. The basic responsibilities and work order in each job profiles  remains the same only the nomenclature of job profile 'Financial Analyst' varies depending upon the sector or the organization.

Some of the job profiles which come under 'Financial Analyst' profile are:

  • Corporate development analyst- Their work is to research about the business decisions and find ways to improve the same which will help in the development of the organization. They usually work in corporate sectors and firms.
  • Equity research analyst- They produce company and stock research reports, estimates, and recommendations. They work in security industry.
  • Financial planning and analysis (FP&A) analyst- They work within a company's finance organisation, a forecast of the company's profit and loss (income statement) and operating performance for the future quarter and year is provided to senior management.
  • Private equity analyst- They work mostly for private equity firms, conducting research, ratio analysis, and providing opinions on private corporations.
  • Treasury analyst- They are responsible for regulating and analysing the financial activities of their company. This includes controlling cash flow, revenue, liabilities, and assets. Businesses, charitable groups, and government agencies hire Treasury Analysts to manage their money.
  • Investment banking analyst- Accounting, Financial Modelling, Project Financing, Project Valuation, and Financial Statement Analysis are all areas in which an Investment Banking Analyst works. They majorly works in investment banking sectors.
     

II. HOW MUCH DOES A FINANCIAL ANALYST EARN?

  • The average annual salary of an Entry Level Financial Analyst is ₹3.5 lakh. (0-2 years of experience)
  • The average annual salary of a Mid-Level Financial Analyst is ₹5 lakh. (2-5 years of experience)
  • The average annual salary of a Senior Level Financial Analyst is ₹6-7 lakh. (5 and above years of experience)


III. ROLES AND RESPONSIBILITIES OF A FINANCIAL ANALYST

Financial analysts use their strong accounting and compliance backgrounds to investigate previous financial data, forecast future outcomes, and enhance the process and policies. Financial analysts' day-to-day responsibilities include:

  • Analyse the current and the past financial data and performance
  • Prepare reports and projects based on this analysis
  • Evaluate current capital expenditures and depreciation
  • Explore more investment opportunities
  • Establish and evaluate profit plans
  • Identify trends in financial performance and provide ideas for improvement
  • Coordinate with teammates to review financial information and forecasts
  • Provide financial models and forecast


IV. SKILLS NEEDED TO BE A FINANCIAL ANALYST

As a financial analyst you must have a good combination of technical skills as well as soft skills related to their field to perform their job duties more. Some of these skills are mentioned below:

Technical skills

As a financial analyst you need to have some basic technical skills. These skills vary from department to department. Some of these skills are:

Accounting Skills:

  • As the area of work is related to finance, the most important skill that you must have is accounting skill.
  • A financial analyst should be educated with the accounting principles and understand IFRS (International Financial Reporting Standards) and GAAP (Generally Accepted Accounting Principles).
  • Also some skills related to budgeting & forecasting, cost analysis, managing cash flow, reconciliation, etc. will help you work as a financial analyst better.

Financial Modelling:

  • You must also be good at financial modelling.
  • The basic knowledge of different types of financial models, like merger and acquisition financial model, three statement modelling, discounted cash flow, IPO modelling, etc. will be an add-on point.

Knowledge of Accounting Software:

  • When you join as a financial analyst in a company you should have basic knowledge of some accounting software.
  • The most common accounting software is Tally which you must be knowledgeable about. There are various more like GST, QuickBooks India,Zoho Books, MargERP 9+, etc.
  • You can easily learn through various sources online as well as paid courses.

MS Excel Skills:

  • Apart from accounting software, MS Excel is the most needed skill when you are applying for the financial analyst job profile.
  • You can easily learn excel from online courses and a lot of free material is available on YouTube as well.

Business Valuation:

The financial analyst should be able to execute business valuation, which entails assessing the fair value of a company at the time of sale, partnership, ownership, and so on.

Project Financing Skills:

  • If you are possessing project financing skills it will be an excellent asset for the company.
  • In project financing skills you need to know about project finance, financial modelling, and you should have an analytical thinking.

Corporate Finance Knowledge:

This skill is required, especially when you are working in investment banking or wants to become a fund or portfolio manager.

Taxation Knowledge:

A basic knowledge about individual taxes, GST, corporate taxes, TAX saving methods, etc. is an important part of a financial analyst.

 

Soft skills

There are certain soft skills which you need to fulfil for the job of a financial analyst in any company/organization. Some of these basics skills are:

Communication and Interpersonal SkillsApart from the above technical skills, a good communication and interpersonal skills are also necessary. It is quite important as a lot of work involves communicating over email, and talking over the phone to resolve an issue. Interpersonal skill sets help when you are communicating with stakeholders, clients, and investors.

Problem-Solving Skills: You must be able to solve problems. As a financial analyst your whole life relies on this talent, whether it's solving a complex financial calculation or making a key decision for the organisation.

Leadership and Management skills: You may be in charge of entire finance departments or teams on occasion, and an employer may demand you to have strong leadership qualities. Many managers may possess talents such as effective team communication, professional mentoring, and leading collaboration.

Analytical thinking: As an effective financial analyst you must have the ability to anticipate, plan, prioritise, rank, and spot financial difficulties. A financial analyst who possesses these talents may assess and solve problems and also help their company in taking firm financial decisions.


Minimum skills required

Above are some technical and soft skills that you can achieve through the course of time. But there are some minimum skills which are quite necessary if you are building your career as a financial analyst, they are mentioned below:

  • Basic accounting skills
  • Proficient knowledge of Excel
  • Knowledge of Accounting Software
  • Efficient analytical thinking
  • Communication and Interpersonal Skills


V. CERTIFICATIONS

There are various certification that would validate you to be the perfect candidate possessing the essential and core understanding that is required for a Financial Analyst job profile. Some of the certifications that you can opt for which would be beneficial for you are:

 

VI. A GUIDE TO BECOME A FINANCIAL ANALYST

Following is a career path provided for you that would be helpful for you to become a successful financial analyst:

  1. Get a Bachelor’s Degree
  • You are already on your way to a job as a financial analyst if you are already enrolled in college and working on your bachelor's degree.
  • Most working financial analysts majored in finance-related fields such as accounting, statistics, or economics, however this is not required.
  1. Get your Post-Graduation Degree (optional)
  • The top business consulting firms may ask you for a master's degree. 
  • You can always go for master's degree courses Master of Business administration (MBA).
  • But it is not compulsory to have a master’s degree, it would be just a plus point for you.
  1. Attain Licensing and Certifications
  • While extra qualifications may not be required at the start of a professional's career, many professionals gain licences and designations later on.
  • Employers frequently advise financial analysts to acquire the CFA Institute's Chartered Financial Analyst (CFA) certificate.
  • While it is not required by law, this additional certificate can help financial analysts succeed in their careers.
  • Even if new financial analysts do not meet the requirements for certification right away, they can work toward it while gaining experience in the field.
  1. Complete an Internship
  • While it is not mandatory, pursuing a financial analyst internship is strongly recommended.
  • This will help you get a more realistic view of the job and what kind of tasks you may expect on a daily basis in this field.
  • An internship will also help in the preparing of your resume and provide you with experience that you can use in job interviews.
  • Even for entry-level employment, most employers prefer to hire employees with prior experience.
  1. Make a Good Resume
  • One of the most important thing that one needs to prepare before applying at any company is a resume/CV.
  • Make a good resume, having all the relevant details like- internships, certificate courses, and work experiences.
  • Make sure that the details you add are authentic.
  1. Interview Preparation
  • The final step in your selection would always be a personal interview.
  • It is basically a test of your personality and test of your attitude towards the job you have applied for.
  • Refer to interview videos that are available online regarding associate consultant recruitment. Learn what type of questions can be asked and prepare accordingly.
  • Sometimes, the questions may be asked regarding the company you have applied for, to know your interest in the same. Read the job description to analyse what could be the possible questions the recruiters can ask concerning this.
  1. Find a Job
  • After graduating with a degree in a related discipline, you can look for jobs as a junior financial analyst or as an entry-level financial analyst.
  • These positions are frequently supervised by an experienced analyst who will teach you the fundamentals of the industry.
  1. Build On-the-Job Experience
  • To become a financial analyst, it's clear that you'll need the required degree as well as any necessary licencing and certifications.
  • Aside from these procedures, potential financial analysts should seek out work experience in the financial industry as soon as possible and keep working ahead.

 

VII. TOP 10 COMPANIES IN INDIA TO HIRE FINANCIAL ANALYST AS FRESHERS

  1. Corporate development analyst-
  1. Equity research analyst-
  1. Financial planning and analysis (FP&A) analyst-
  1. Private equity analyst-
  1. Treasury analyst-
  1. Investment banking analyst-

VIII. INTERNSHIPS

You will collect data, write reports, explore trends, analyse performance impact, construct financial models, and forecast results as a financial analyst intern. You will assist in the documentation of processes as well as the execution of strategic plans.

You can use platforms like Internshala and LinkedIn to search for such internships.

Internship fields

Though internship as Financial Analyst intern will be preferable to grab the financial analyst jobs, any internship which facilitates you to learn any of the skills mentioned in the roadmap will help you get the same. Some of those internships are:

  • GST and Income Tax Management Internship
  • Accounts (Tally) Internship
  • Chartered Accountant Assistant
  • Excel operator
  • Bookkeeper
  • Assistant Accountant

Companies hiring Financial Analyst intern

Here are some of the companies that hire Financial Analyst as interns:


IX. FUTURE OUTLOOK

  • The demand for financial analysts are anyway growing but in the coming years it will be the double of that of today’s time.
  • Financial analyst demand tends to rise in parallel with general economic activity.
  • When new businesses are started or current businesses expand, financial analysts will be needed to evaluate investment prospects.
  • Furthermore, emerging markets around the world are presenting new investment opportunities for financial analysts.

 

X. CAREER HIERARCHY

  • Entry level: In the initial stage if you join the as a fresher than your job positions might be one of the follows: Finance Assistant, Junior Financial Analyst, Finance Clerk, Payroll Clerk, and Finance Intern. The work provided to you would be basics related to book keeping, accounts keeping, etc.
  • Individual Contributors: After gaining 2-3years of work experience your designation would be Financial Analyst, Credit Analyst, Economist, Budget Analyst, Purchasing Analyst, etc. depending upon the specialised field that you choose.
  • Finance Manager: After 5 to 7 years of work experience you will become the manager of your department. Your work would be to manage the day to day work of the department and get worked done by your juniors.
  • Vice president of Finance: The next step after gaining a good 8-9 years of experience you could become a VP. Your work would be direct financing strategies, analysis, forecasting and budget management. Direct all aspects of accounting operations such as receivables, payables, payroll and financial reporting.
  • Chief Financial Officer: Chief Financial Officer (CFO) is usually responsible for the administrative, financial, and risk management operations of the company. In addition, they are often involved in the development of a financial and operational strategy, KPIs, and the on-going development and monitoring of the financial system.

ALL THE BEST!!!